The US Senate banking committee is expected to act on the Crapo-Johnson proposal to reform Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) this week, but a new proposal from committee members Sherrod Brown (D-OH) and David Vitter (R-LA) shows how big the gulf is between competing visions of America’s mortgage market.
Megabanks would have nearly double the capital requirements of regional banks
Support for Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) reform doesn’t split neatly along Democrat-Republican lines, but there is still a divide between two basic interests – those who want to protect taxpayers from another bailout of the secondary mortgage market, and those who want to ensure the survival of affordable, 30-year fixed rate mortgages. The amendment filed by Brown and Vitter would alter an across-the-board capital requirement of 10% of risk-weighted assets with a tiered system that forced larger banks to maintain a higher capital ratio. Under this plan, banks with $500 billion or more in assets would have to meet a new 15% capital requirement, regional and mid-sized banks would have to keep an 8% capital ratio, and community banks would be unaffected.